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A. O. Smith Corp. Reports Operating Results (10-K)

February 24, 2011 | About:
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10qk

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A. O. Smith Corp. (AOS) filed Annual Report for the period ended 2010-12-31.

Ao. Smith Corp. has a market cap of $1.88 billion; its shares were traded at around $41.16 with a P/E ratio of 15.6 and P/S ratio of 1.3. The dividend yield of Ao. Smith Corp. stocks is 1.4%. Ao. Smith Corp. had an annual average earning growth of 1.7% over the past 10 years.Hedge Fund Gurus that owns AOS: Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors. Mutual Fund and Other Gurus that owns AOS: John Keeley of Keeley Fund Management, Chuck Royce of Royce& Associates, John Buckingham of Al Frank Asset Management, Inc., Mario Gabelli of GAMCO Investors, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

The aggregate market value of voting stock held by non-affiliates of the registrant was $27,126,427 for Class A Common Stock and $783,934,922 for Common Stock as of June 30, 2010.

In order to improve competitiveness by generating new products and processes, we conduct research and development at our Corporate Technology Center in Milwaukee, Wisconsin and at our operating locations. Total expenditures for research and development in 2010, 2009 and 2008 were $37.1, $31.0 and $28.8 million, respectively.

Due to the negative investment returns in 2008, the projected benefit obligations of our defined benefit pension plans exceeded the fair value of the plan assets by $221.3 million at December 31, 2010. Beginning in 2008, the minimum required contribution equals the target normal cost plus a seven year amortization of any funding shortfall, offset by any ERISA credit balance. The company is required to make a minimal contribution to the plan in 2011. The company is forecasting contributions of up to $200 million in 2011 using a portion of the cash proceeds from the expected sale of the Electrical Products business, which would be in lieu of over $200 million in contributions that likely would have to be made over the next five years. The company is forecasting no contributions in 2012. However, the company cannot provide any assurance that the sale of the Electrical Products business will be completed and provide the funds for such a contribution in 2011. Among the key assumptions inherent in the actuarially calculated pension plan obligation and pension plan expense are the discount rate and the expected rate of return on plan assets. If interest rates and actual rates of return on invested plan assets were to decrease significantly, our pension plan obligations could increase materially. The size of future required pension contributions could result in us dedicating a substantial portion of our cash flow from operations to making the contributions which could negatively impact our flexibility in managing the company.

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